What is the difference between foreclosure and bankruptcy?

The primary difference between foreclosure and bankruptcy is that foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has defaulted, while bankruptcy is a federal court proceeding that provides debt relief to individuals and businesses. Foreclosure is a process in which a lender or mortgage servicer takes ownership of a property when the borrower has failed to make payments on the loan. The lender begins the process by filing a foreclosure action in court. The court then issues a ruling allowing the lender to take possession of the property. Once the foreclosure process is complete, the borrower may lose the home and all equity in it. Bankruptcy, on the other hand, is a federal court procedure that provides debt relief to individuals and businesses. With bankruptcy, debtors can eliminate or restructure their debt in order to repay it over time. Bankruptcy can be filed in different types such as Chapter 7 or Chapter 13, but in both cases, the court will decide how the debt is to be repaid. Bankruptcy also stops creditors from taking certain collection actions. In summary, the key difference between foreclosure and bankruptcy is that foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has defaulted, while bankruptcy is a federal court proceeding that provides debt relief to individuals and businesses.

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What is the difference between foreclosure and bankruptcy?

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